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The Basis for Business Decisions. Financial & Managerial Accounting. THIRTEENTH EDITION . Williams Haka Bettner. Chapter 1. ACCOUNTING: INFORMATION FOR DECISION MAKING. The accounting process.

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Financial & Managerial Accounting

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The accounting process

Accounting “links” decision makers with economic activities ¾ and with the results of their decisions.



Economic activities

Actions (decisions)

Decision makers

types of accounting information
Types of Accounting Information





Information System

  • Information Users
  • Investors
  • Creditors
  • Managers
  • Owners
  • Customers
  • Employees
  • Regulators -SEC
  • -IRS
  • -EPA
  • Financial Information Provided
  • Profitability
  • Financial position
  • Cash flows
  • Decisions Supported
  • Performance evaluations
  • Stock investments
  • Tax strategies
  • Labor relations
  • Resource allocations
  • Lending decisions
  • Borrowing
basic functions of an accounting system



Basic Functions of an Accounting System
  • Interpret and record business transactions.
basic functions of an accounting system7

Classify similar transactions into useful reports.

  • Summarize and communicate information to decision makers.
Basic Functions of an Accounting System
  • Interpret and record business transactions.
external users of accounting information
External Users of Accounting Information
  • Owners
  • Creditors
  • Labor unions
  • Governmental agencies
  • Suppliers
  • Customers
  • Trade associations
  • General public


Provide information about economic resources, claims to resources, and changes in resources and claims.

Provide information useful in assessing amount, timing and uncertainty of future cash flows.

Provide information useful in making investment and credit decisions.


Objectives of Financial Reporting

objectives of external financial reporting
The primary financial statements.

Balance Sheet

Income Statement

Statement of Cash Flows

Objectives of External Financial Reporting
characteristics of externally reported information
Characteristics of Externally Reported Information

A Means to an End

Usefulness Enhanced via Explanation

Broader than Financial Statements

Based on General-Purpose Assumption

Historical in Nature

Results from Inexact and Approximate Measures

users of internal accounting information
Users of Internal Accounting Information
  • Board of directors
  • Chief executive officer (CEO)
  • Chief financial officer (CFO)
  • Vice presidents
  • Business unit managers
  • Plant managers
  • Store managers
  • Line supervisors
objectives of management accounting information
Objectives of Management Accounting Information

To help achieve goals and missions

To help evaluate and reward decision makers

characteristics of management accounting information
Characteristics of Management Accounting Information


Identify Decision Maker

A Means to an End

Measures of Efficiency and Effectiveness

Oriented Toward Future

integrity of accounting information
Integrity of Accounting Information
  • Institutional Features
  • Generally Accepted Accounting Principles (GAAP)
  • Financial Accounting Standards Board
  • Securities and Exchange Commission
  • Internal Control Structure
  • Audits
  • Legislation
integrity of accounting information17
Integrity of Accounting Information
  • Professional Organizations
  • American Institute of Certified Public Accountants
  • Institute of Management Accountants
  • Institute of Internal Auditors
  • American Accounting Association
integrity of accounting information18


Integrity of Accounting Information
  • Competence, Judgment and Ethical Behavior
  • Certified Public Accountants (CPAs)
  • Certificate in Management Accounting (CMA)
  • Certificate in Internal Auditing (CIA)
  • Code of Professional Conduct
integrity of accounting information19
Integrity of Accounting Information
  • Careers in Accounting
  • Public Accounting
  • Management Accounting
  • Governmental Accounting
  • Accounting Education